Renewable Energy Deals Buck Uncertainty to Rise 40%, PWC Says

Renewable energy mergers and acquisitions rose 40 percent in value last year, bucking the uncertainty caused by the European Union debt crisis, the global consultant PwC said today.

About $53.5 billion of wind, solar, biofuels, energy efficiency, geothermal, biomass and hydro deals were completed, up from $38.2 billion in 2010, PwC said in an e-mailed report. It’s the highest in the four years that PwC has conducted the survey. The overall number of deals dropped to 570 from 606.

The uptick in money spent on mergers and acquisitions against a backdrop of European governments cutting spending to balance budgets and “challenging” debt markets shows how the renewables industry has matured, Ronan O’Regan, director of energy in London at PwC, said in a phone interview.

“Total deal value was up, and there’s been a trend toward larger-size deals, which reflects increasing maturity in wind and solar,” O’Regan said. It’s a surprise as “the negative drivers seem to outweigh the positives,” he said of EU government efforts to cut deficits.

Wind and solar each had more than $15 billion of deals while $10 billion of transactions were completed in energy efficiency. European bidders accounted for 48 percent of the total, North America 24 percent. The value of deals with Asian bidders almost doubled to $9.4 billion, or 18 percent of the total, up from 12 percent last year, the consultant said.

“We expect to see this activity strengthen with interest from acquirers from Korea and Singapore featuring alongside Chinese and Japanese bidders,” PwC said in the report, without naming potential acquirers.

The year’s biggest deal was CPFL Energia SA (CPFE3) of Brazil’s $2.9 billion purchase of ERSA Energias Renovaveis SA, according to PwC. It classified Iberdrola SA (IBE)’s acquisition of part of its clean energy unit Iberdrola Renovables SA as a share repurchase.

It will be “difficult” to predict what volume of deal activity will be this year because of the “rolling uncertainty” regarding European economies, O’Regan said.

“On balance, it’ll be another difficult year and I’d be surprised if deal value increases by as much in 2012 as in 2011,” he said.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net